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Securities and Exchange Commission July 29, 1954 Page Two stock sale will be used to defray the cost of organization of the corporation and the balance will be used to purchase stock of Colonial Airlines. The directors of the corporation will be persons elected by the pilot stockholders. Thereafter, additional stock in the corporation may be sold whenever the directors of the corporation believe such action is desirable. The additional stock is to be sold only to the pilots of Colonial Airlines or to such other employees of Colonial Airlines as the directors may determine. The price at which such additional stock may be issued shall be not less than the then liquidating value of the stock already outstanding. It is anticipated that the total receipts from the sale of all stock will be substantially less than $100,000. Subject to applicable legal restrictions, employee stockholders are to have the right to surrender their stock in return for the then liquidating value of their stock. The stock is to be nontransferable except to other employees of Colonial Airlines, and upon the death, resignation or discharge of any employee, his stock is to be repurchased by the corporation at its then liquidating value. No management fee or other commission is to be charged by the corporation and it is the present intention that no salary be paid to its directors or officers. The only expenses of the corporation which are contemplated are brokerage commissions and related expenses on the purchase and sale of stock, cost of organizing the corporation, and the expenses incident to running the corporation. No investments other than in the stock of Colonial Airlines are to be made except with the approval of a majority of the stockholder employees. I would appreciate your advice as to whether a corporation following the above outlined procedures would qualify for an exemption under the Investment Company Act. If it would not, nor in the Commission would require certain additional safeguards or features, I would appreciate your suggestions in order that an exemption can be obtained. Faithfully yours, James M. Landis JML:m